diff --git a/src/typeagent/mcp/server.py b/src/typeagent/mcp/server.py
index 0c106ec..0ff612f 100644
--- a/src/typeagent/mcp/server.py
+++ b/src/typeagent/mcp/server.py
@@ -6,6 +6,7 @@
 
 import argparse
 from dataclasses import dataclass
+import os
 import time
 from typing import Any
 
@@ -28,6 +29,9 @@
 from typeagent.storage.memory.semrefindex import TermToSemanticRefIndex
 from typeagent.storage.utils import create_storage_provider
 
+# Example podcast index path for documentation and error messages
+_EXAMPLE_PODCAST_INDEX = "tests/testdata/Episode_53_AdrianTchaikovsky_index"
+
 
 class MCPTypeChatModel(typechat.TypeChatLanguageModel):
     """TypeChat language model that uses MCP sampling API instead of direct API calls."""
@@ -142,7 +146,9 @@ async def make_context(
         entities_top_k=50, topics_top_k=50, messages_top_k=None, chunking=None
     )
 
-    query_context = await load_podcast_index_or_database(settings, dbname)
+    query_context = await load_podcast_database_or_index(
+        settings, dbname, _podcast_index
+    )
 
     # Use MCP-based model instead of one that requires API keys
     model = MCPTypeChatModel(session)
@@ -161,24 +167,33 @@ async def make_context(
     return context
 
 
-async def load_podcast_index_or_database(
+async def load_podcast_database_or_index(
     settings: ConversationSettings,
     dbname: str | None = None,
+    podcast_index: str | None = None,
 ) -> query.QueryEvalContext[podcast.PodcastMessage, Any]:
-    if dbname is None:
-        conversation = await podcast.Podcast.read_from_file(
-            "tests/testdata/Episode_53_AdrianTchaikovsky_index", settings
-        )
-    else:
+    if dbname is not None:
+        # Load from SQLite database
         conversation = await podcast.Podcast.create(settings)
+    elif podcast_index is not None:
+        # Load from JSON index files
+        conversation = await podcast.Podcast.read_from_file(podcast_index, settings)
+    else:
+        raise ValueError(
+            "Either --database or --podcast-index must be specified. "
+            "Use --podcast-index to specify the path to podcast index files "
+            f"(e.g., '{_EXAMPLE_PODCAST_INDEX}')."
+        )
     return query.QueryEvalContext(conversation)
 
 
 # Create an MCP server
 mcp = FastMCP("typagent")
 
-# Global variable to store database path (set via command-line argument)
+# Global variables to store command-line arguments
+# (no other straightforward way to pass to tool handlers)
 _dbname: str | None = None
+_podcast_index: str | None = None
 
 
 @dataclass
@@ -245,12 +260,49 @@ async def query_conversation(
         "--database",
         type=str,
         default=None,
-        help="Path to the SQLite database file (default: load from JSON file)",
+        help="Path to a SQLite database file with pre-indexed podcast data",
+    )
+    parser.add_argument(
+        "-p",
+        "--podcast-index",
+        type=str,
+        default=None,
+        help="Path to podcast index files (excluding '_data.json' suffix), "
+        f"e.g., '{_EXAMPLE_PODCAST_INDEX}'",
     )
     args = parser.parse_args()
 
-    # Store database path in global variable (no other straightforward way to pass to tool)
+    # Validate arguments
+    if args.database is None and args.podcast_index is None:
+        parser.error(
+            "Either --database or --podcast-index is required.\n"
+            "Example: python -m typeagent.mcp.server "
+            f"--podcast-index {_EXAMPLE_PODCAST_INDEX}"
+        )
+
+    if args.database is not None and args.podcast_index is not None:
+        parser.error("Cannot specify both --database and --podcast-index")
+
+    # Validate file existence
+    if args.database is not None and not os.path.exists(args.database):
+        parser.error(
+            f"Database file not found: {args.database}\n"
+            "Please provide a valid path to an existing SQLite database."
+        )
+
+    if args.podcast_index is not None:
+        data_file = args.podcast_index + "_data.json"
+        if not os.path.exists(data_file):
+            parser.error(
+                f"Podcast index file not found: {data_file}\n"
+                "Please provide a valid path to podcast index files "
+                "(without the '_data.json' suffix).\n"
+                f"Example: {_EXAMPLE_PODCAST_INDEX}"
+            )
+
+    # Store in global variables for tool handlers
     _dbname = args.database
+    _podcast_index = args.podcast_index
 
     # Use stdio transport for simplicity
     mcp.run(transport="stdio")
diff --git a/tests/test/conftest.py b/tests/conftest.py
similarity index 89%
rename from tests/test/conftest.py
rename to tests/conftest.py
index e5f326b..3533e23 100644
--- a/tests/test/conftest.py
+++ b/tests/conftest.py
@@ -1,8 +1,9 @@
 # Copyright (c) Microsoft Corporation.
 # Licensed under the MIT License.
 
-from collections.abc import AsyncGenerator, Iterator
+from collections.abc import AsyncGenerator, Callable, Iterator
 import os
+from pathlib import Path
 import tempfile
 from typing import Any
 
@@ -43,6 +44,37 @@
     MemorySemanticRefCollection,
 )
 
+# --- Testdata path utilities ---
+# Locate the tests directory relative to this file
+_TESTS_DIR = Path(__file__).resolve().parent  # tests/
+_TESTDATA_DIR = _TESTS_DIR / "testdata"
+_REPO_ROOT = _TESTS_DIR.parent
+
+
+def get_testdata_path(filename: str) -> str:
+    """Return absolute path to a file in tests/testdata/."""
+    return str(_TESTDATA_DIR / filename)
+
+
+def get_repo_root() -> Path:
+    """Return the repository root path."""
+    return _REPO_ROOT
+
+
+def has_testdata_file(filename: str) -> bool:
+    """Check if a testdata file exists (for use in skipif conditions)."""
+    return (_TESTDATA_DIR / filename).exists()
+
+
+# Commonly used test files as constants
+CONFUSE_A_CAT_VTT = get_testdata_path("Confuse-A-Cat.vtt")
+PARROT_SKETCH_VTT = get_testdata_path("Parrot_Sketch.vtt")
+FAKE_PODCAST_TXT = get_testdata_path("FakePodcast.txt")
+EPISODE_53_INDEX = get_testdata_path("Episode_53_AdrianTchaikovsky_index")
+EPISODE_53_TRANSCRIPT = get_testdata_path("Episode_53_AdrianTchaikovsky.txt")
+EPISODE_53_ANSWERS = get_testdata_path("Episode_53_Answer_results.json")
+EPISODE_53_SEARCH = get_testdata_path("Episode_53_Search_results.json")
+
 
 @pytest.fixture(scope="session")
 def needs_auth() -> None:
@@ -63,6 +95,17 @@ def embedding_model() -> AsyncEmbeddingModel:
     return AsyncEmbeddingModel(model_name=TEST_MODEL_NAME)
 
 
+@pytest.fixture(scope="session")
+def testdata_path() -> Callable[[str], str]:
+    """Fixture returning a function to get absolute paths to testdata files.
+
+    Usage:
+        def test_something(testdata_path):
+            path = testdata_path("Confuse-A-Cat.vtt")
+    """
+    return get_testdata_path
+
+
 @pytest.fixture
 def temp_dir() -> Iterator[str]:
     with tempfile.TemporaryDirectory() as dir:
diff --git a/tests/test/test_add_messages_with_indexing.py b/tests/test_add_messages_with_indexing.py
similarity index 100%
rename from tests/test/test_add_messages_with_indexing.py
rename to tests/test_add_messages_with_indexing.py
diff --git a/tests/test/test_auth.py b/tests/test_auth.py
similarity index 100%
rename from tests/test/test_auth.py
rename to tests/test_auth.py
diff --git a/tests/test/test_collections.py b/tests/test_collections.py
similarity index 100%
rename from tests/test/test_collections.py
rename to tests/test_collections.py
diff --git a/tests/test/test_conversation_metadata.py b/tests/test_conversation_metadata.py
similarity index 100%
rename from tests/test/test_conversation_metadata.py
rename to tests/test_conversation_metadata.py
diff --git a/tests/test/test_demo.py b/tests/test_demo.py
similarity index 95%
rename from tests/test/test_demo.py
rename to tests/test_demo.py
index 36acca3..599f006 100644
--- a/tests/test/test_demo.py
+++ b/tests/test_demo.py
@@ -3,7 +3,6 @@
 
 import argparse
 import asyncio
-import os
 import textwrap
 import time
 
@@ -12,23 +11,21 @@
 from typeagent.knowpro.interfaces import ScoredSemanticRefOrdinal
 from typeagent.podcasts import podcast
 
-tests_dir = os.path.dirname(__file__)
-root_dir = os.path.dirname(tests_dir)
-DEFAULT_FILE = os.path.join(root_dir, "testdata", "Episode_53_AdrianTchaikovsky_index")
+from conftest import EPISODE_53_INDEX
 
 parser = argparse.ArgumentParser()
 parser.add_argument(
     "filename",
     nargs="?",
     type=str,
-    default=DEFAULT_FILE,
+    default=EPISODE_53_INDEX,
 )
 
 
 def test_main(really_needs_auth: None):
     # auth is needed because we use embeddings.
     # TODO: Only use the embeddings loaded from the file and cached.
-    asyncio.run(main(DEFAULT_FILE))
+    asyncio.run(main(EPISODE_53_INDEX))
 
 
 async def main(filename_prefix: str):
diff --git a/tests/test/test_embedding_consistency.py b/tests/test_embedding_consistency.py
similarity index 100%
rename from tests/test/test_embedding_consistency.py
rename to tests/test_embedding_consistency.py
diff --git a/tests/test/test_embeddings.py b/tests/test_embeddings.py
similarity index 100%
rename from tests/test/test_embeddings.py
rename to tests/test_embeddings.py
diff --git a/tests/test/test_factory.py b/tests/test_factory.py
similarity index 100%
rename from tests/test/test_factory.py
rename to tests/test_factory.py
diff --git a/tests/test/test_incremental_index.py b/tests/test_incremental_index.py
similarity index 96%
rename from tests/test/test_incremental_index.py
rename to tests/test_incremental_index.py
index 077db4b..12f706a 100644
--- a/tests/test/test_incremental_index.py
+++ b/tests/test_incremental_index.py
@@ -18,8 +18,7 @@
 )
 from typeagent.transcripts.transcript_ingest import ingest_vtt_transcript
 
-tests_dir = os.path.dirname(__file__)
-root_dir = os.path.dirname(tests_dir)
+from conftest import CONFUSE_A_CAT_VTT, PARROT_SKETCH_VTT
 
 
 @pytest.mark.asyncio
@@ -144,9 +143,8 @@ async def test_incremental_index_with_vtt_files():
         # First VTT file ingestion
         print("\n=== Import first VTT file ===")
         # Import the first transcript
-        DEFAULT_FILE = os.path.join(root_dir, "testdata", "Confuse-A-Cat.vtt")
         transcript1 = await ingest_vtt_transcript(
-            DEFAULT_FILE,
+            CONFUSE_A_CAT_VTT,
             settings,
             dbname=db_path,
         )
@@ -169,9 +167,8 @@ async def test_incremental_index_with_vtt_files():
         settings2.semantic_ref_index_settings.auto_extract_knowledge = False
 
         # Ingest the second transcript
-        DEFAULT_FILE = os.path.join(root_dir, "testdata", "Parrot_Sketch.vtt")
         transcript2 = await ingest_vtt_transcript(
-            DEFAULT_FILE,
+            PARROT_SKETCH_VTT,
             settings2,
             dbname=db_path,
         )
diff --git a/tests/test/test_interfaces.py b/tests/test_interfaces.py
similarity index 100%
rename from tests/test/test_interfaces.py
rename to tests/test_interfaces.py
diff --git a/tests/test/test_knowledge.py b/tests/test_knowledge.py
similarity index 100%
rename from tests/test/test_knowledge.py
rename to tests/test_knowledge.py
diff --git a/tests/test/test_kplib.py b/tests/test_kplib.py
similarity index 100%
rename from tests/test/test_kplib.py
rename to tests/test_kplib.py
diff --git a/tests/test/test_mcp_server.py b/tests/test_mcp_server.py
similarity index 94%
rename from tests/test/test_mcp_server.py
rename to tests/test_mcp_server.py
index fc825ab..03fd0e6 100644
--- a/tests/test/test_mcp_server.py
+++ b/tests/test_mcp_server.py
@@ -14,17 +14,21 @@
 from mcp.shared.context import RequestContext
 from mcp.types import CreateMessageRequestParams, CreateMessageResult, TextContent
 
+from conftest import EPISODE_53_INDEX
+
 
 @pytest.fixture
 def server_params() -> StdioServerParameters:
-    """Create MCP server parameters with minimal environment."""
-    env = {}
+    """Create MCP server parameters with environment inherited from parent process."""
+    # Start with the full environment - subprocess needs PATH, PYTHONPATH, etc.
+    env = dict(os.environ)
+    # Coverage support
     if "COVERAGE_PROCESS_START" in os.environ:
         env["COVERAGE_PROCESS_START"] = os.environ["COVERAGE_PROCESS_START"]
 
     return StdioServerParameters(
         command=sys.executable,
-        args=["-m", "typeagent.mcp.server"],
+        args=["-m", "typeagent.mcp.server", "--podcast-index", EPISODE_53_INDEX],
         env=env,
     )
 
diff --git a/tests/test/test_message_text_index_population.py b/tests/test_message_text_index_population.py
similarity index 100%
rename from tests/test/test_message_text_index_population.py
rename to tests/test_message_text_index_population.py
diff --git a/tests/test/test_message_text_index_serialization.py b/tests/test_message_text_index_serialization.py
similarity index 100%
rename from tests/test/test_message_text_index_serialization.py
rename to tests/test_message_text_index_serialization.py
diff --git a/tests/test/test_messageindex.py b/tests/test_messageindex.py
similarity index 100%
rename from tests/test/test_messageindex.py
rename to tests/test_messageindex.py
diff --git a/tests/test/test_online.py b/tests/test_online.py
similarity index 100%
rename from tests/test/test_online.py
rename to tests/test_online.py
diff --git a/tests/test/test_podcast_incremental.py b/tests/test_podcast_incremental.py
similarity index 100%
rename from tests/test/test_podcast_incremental.py
rename to tests/test_podcast_incremental.py
diff --git a/tests/test/test_podcasts.py b/tests/test_podcasts.py
similarity index 95%
rename from tests/test/test_podcasts.py
rename to tests/test_podcasts.py
index 2ac9b3a..6f901a7 100644
--- a/tests/test/test_podcasts.py
+++ b/tests/test_podcasts.py
@@ -13,9 +13,7 @@
 from typeagent.podcasts import podcast_ingest
 from typeagent.podcasts.podcast import Podcast
 
-tests_dir = os.path.dirname(__file__)
-root_dir = os.path.dirname(tests_dir)
-DEFAULT_FILE = os.path.join(root_dir, "testdata", "FakePodcast.txt")
+from conftest import FAKE_PODCAST_TXT
 
 
 @pytest.mark.asyncio
@@ -25,7 +23,7 @@ async def test_ingest_podcast(
     # Import the podcast
     settings = ConversationSettings(embedding_model)
     pod = await podcast_ingest.ingest_podcast(
-        DEFAULT_FILE,
+        FAKE_PODCAST_TXT,
         settings,
         None,
         Datetime.now(timezone.utc),  # Use timezone-aware datetime
diff --git a/tests/test/test_property_index_population.py b/tests/test_property_index_population.py
similarity index 100%
rename from tests/test/test_property_index_population.py
rename to tests/test_property_index_population.py
diff --git a/tests/test/test_propindex.py b/tests/test_propindex.py
similarity index 100%
rename from tests/test/test_propindex.py
rename to tests/test_propindex.py
diff --git a/tests/test/test_query.py b/tests/test_query.py
similarity index 100%
rename from tests/test/test_query.py
rename to tests/test_query.py
diff --git a/tests/test/test_query_method.py b/tests/test_query_method.py
similarity index 100%
rename from tests/test/test_query_method.py
rename to tests/test_query_method.py
diff --git a/tests/test/test_related_terms_fast.py b/tests/test_related_terms_fast.py
similarity index 100%
rename from tests/test/test_related_terms_fast.py
rename to tests/test_related_terms_fast.py
diff --git a/tests/test/test_related_terms_index_population.py b/tests/test_related_terms_index_population.py
similarity index 100%
rename from tests/test/test_related_terms_index_population.py
rename to tests/test_related_terms_index_population.py
diff --git a/tests/test/test_reltermsindex.py b/tests/test_reltermsindex.py
similarity index 100%
rename from tests/test/test_reltermsindex.py
rename to tests/test_reltermsindex.py
diff --git a/tests/test/test_searchlib.py b/tests/test_searchlib.py
similarity index 100%
rename from tests/test/test_searchlib.py
rename to tests/test_searchlib.py
diff --git a/tests/test/test_secindex.py b/tests/test_secindex.py
similarity index 100%
rename from tests/test/test_secindex.py
rename to tests/test_secindex.py
diff --git a/tests/test/test_secindex_storage_integration.py b/tests/test_secindex_storage_integration.py
similarity index 100%
rename from tests/test/test_secindex_storage_integration.py
rename to tests/test_secindex_storage_integration.py
diff --git a/tests/test/test_semrefindex.py b/tests/test_semrefindex.py
similarity index 100%
rename from tests/test/test_semrefindex.py
rename to tests/test_semrefindex.py
diff --git a/tests/test/test_serialization.py b/tests/test_serialization.py
similarity index 100%
rename from tests/test/test_serialization.py
rename to tests/test_serialization.py
diff --git a/tests/test/test_sqlite_indexes.py b/tests/test_sqlite_indexes.py
similarity index 100%
rename from tests/test/test_sqlite_indexes.py
rename to tests/test_sqlite_indexes.py
diff --git a/tests/test/test_sqlitestore.py b/tests/test_sqlitestore.py
similarity index 100%
rename from tests/test/test_sqlitestore.py
rename to tests/test_sqlitestore.py
diff --git a/tests/test/test_storage_providers_unified.py b/tests/test_storage_providers_unified.py
similarity index 100%
rename from tests/test/test_storage_providers_unified.py
rename to tests/test_storage_providers_unified.py
diff --git a/tests/test/test_timestampindex.py b/tests/test_timestampindex.py
similarity index 100%
rename from tests/test/test_timestampindex.py
rename to tests/test_timestampindex.py
diff --git a/tests/test/test_transcripts.py b/tests/test_transcripts.py
similarity index 97%
rename from tests/test/test_transcripts.py
rename to tests/test_transcripts.py
index 2efef03..9079833 100644
--- a/tests/test/test_transcripts.py
+++ b/tests/test_transcripts.py
@@ -21,6 +21,8 @@
     webvtt_timestamp_to_seconds,
 )
 
+from conftest import CONFUSE_A_CAT_VTT, has_testdata_file, PARROT_SKETCH_VTT
+
 
 def test_extract_speaker_from_text():
     """Test speaker extraction from various text formats."""
@@ -67,12 +69,12 @@ def test_webvtt_timestamp_conversion():
 
 
 @pytest.mark.skipif(
-    not os.path.exists("tests/testdata/Confuse-A-Cat.vtt"),
+    not has_testdata_file("Confuse-A-Cat.vtt"),
     reason="Test VTT file not found",
 )
 def test_get_transcript_info():
     """Test getting basic information from a VTT file."""
-    vtt_file = "tests/testdata/Confuse-A-Cat.vtt"
+    vtt_file = CONFUSE_A_CAT_VTT
 
     # Test duration
     duration = get_transcript_duration(vtt_file)
@@ -93,7 +95,7 @@ def conversation_settings(
 
 
 @pytest.mark.skipif(
-    not os.path.exists("tests/testdata/Confuse-A-Cat.vtt"),
+    not has_testdata_file("Confuse-A-Cat.vtt"),
     reason="Test VTT file not found",
 )
 @pytest.mark.asyncio
@@ -108,7 +110,7 @@ async def test_ingest_vtt_transcript(conversation_settings: ConversationSettings
     from typeagent.storage.memory.semrefindex import TermToSemanticRefIndex
     from typeagent.transcripts.transcript_ingest import parse_voice_tags
 
-    vtt_file = "tests/testdata/Confuse-A-Cat.vtt"
+    vtt_file = CONFUSE_A_CAT_VTT
 
     # Use in-memory storage to avoid database cleanup issues
     settings = conversation_settings
@@ -264,7 +266,7 @@ async def test_transcript_knowledge_extraction_slow(
     settings = ConversationSettings(embedding_model)
 
     # Parse first 5 captions from Parrot Sketch
-    vtt_file = "tests/testdata/Parrot_Sketch.vtt"
+    vtt_file = PARROT_SKETCH_VTT
     if not os.path.exists(vtt_file):
         pytest.skip(f"Test file {vtt_file} not found")
 
diff --git a/tests/test/test_utils.py b/tests/test_utils.py
similarity index 100%
rename from tests/test/test_utils.py
rename to tests/test_utils.py
diff --git a/tests/test/test_vectorbase.py b/tests/test_vectorbase.py
similarity index 100%
rename from tests/test/test_vectorbase.py
rename to tests/test_vectorbase.py
diff --git a/tools/ingest_podcast.py b/tools/ingest_podcast.py
index 90e80ec..6ff9cdc 100644
--- a/tools/ingest_podcast.py
+++ b/tools/ingest_podcast.py
@@ -6,7 +6,6 @@
 from typeagent.knowpro.convsettings import ConversationSettings
 from typeagent.podcasts.podcast_ingest import ingest_podcast
 
-DEFAULT_TRANSCRIPT = "testdata/Episode_53_AdrianTchaikovsky.txt"
 CHARS_PER_MINUTE = 1050  # My guess for average speech rate incl. overhead
 
 
@@ -50,11 +49,16 @@ async def main():
     if args.database is not None and args.json_output is not None:
         raise SystemExit("Please use at most one of --database and --json-output")
     if args.transcript is None:
-        if os.path.exists(DEFAULT_TRANSCRIPT):
-            args.transcript = DEFAULT_TRANSCRIPT
-            print("Reading default transcript:", DEFAULT_TRANSCRIPT)
-        else:
-            raise SystemExit("Please provide a transcript file to ingest")
+        raise SystemExit(
+            "Error: A transcript file is required.\n"
+            "Usage: python ingest_podcast.py <transcript_file>\n"
+            "Example: python ingest_podcast.py path/to/transcript.vtt"
+        )
+    if not os.path.exists(args.transcript):
+        raise SystemExit(
+            f"Error: Transcript file not found: {args.transcript}\n"
+            "Please verify the path exists and is accessible."
+        )
 
     load_dotenv()
 
diff --git a/tools/query.py b/tools/query.py
index d11f643..83e4339 100644
--- a/tools/query.py
+++ b/tools/query.py
@@ -536,6 +536,23 @@ async def main():
     args = parser.parse_args()
     fill_in_debug_defaults(parser, args)
 
+    # Validate required podcast argument
+    if args.podcast is None and args.database is None:
+        raise SystemExit(
+            "Error: Either --podcast or --database is required.\n"
+            "Usage: python query.py --podcast <path_to_index>\n"
+            "   or: python query.py --database <path_to_database>\n"
+            "Example: python query.py --podcast tests/testdata/Episode_53_index"
+        )
+    if args.podcast is not None:
+        index_file = args.podcast + "_index.json"
+        if not os.path.exists(index_file):
+            raise SystemExit(
+                f"Error: Podcast index file not found: {index_file}\n"
+                "Please verify the path exists and is accessible.\n"
+                "Note: The path should exclude the '_index.json' suffix."
+            )
+
     if args.logfire:
         utils.setup_logfire()
 
@@ -925,27 +942,24 @@ def make_arg_parser(description: str) -> argparse.ArgumentParser:
         ),
     )
 
-    default_podcast_file = "tests/testdata/Episode_53_AdrianTchaikovsky_index"
     parser.add_argument(
         "--podcast",
         type=str,
-        default=default_podcast_file,
+        default=None,
         help="Path to the podcast index files (excluding the '_index.json' suffix)",
     )
-    default_qafile = "tests/testdata/Episode_53_Answer_results.json"
     explain_qa = "a list of questions and answers to test the full pipeline"
     parser.add_argument(
         "--qafile",
         type=str,
-        default=default_qafile,
+        default=None,
         help=f"Path to the Answer_results.json file ({explain_qa})",
     )
-    default_srfile = "tests/testdata/Episode_53_Search_results.json"
     explain_sr = "a list of intermediate results from stages 1, 2 and 3"
     parser.add_argument(
         "--srfile",
         type=str,
-        default=default_srfile,
+        default=None,
         help=f"Path to the Search_results.json file ({explain_sr})",
     )
     parser.add_argument(